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Charles W. Howe: Municipalization -- Are we considering all the alternatives?

Posted:
11/18/2012 01:00:00 AM MST

Xcel Energy published an essay in the Daily Camera on Nov. 14 ("Year one of municipalization: is less more?") that pointed out that we seem to be focusing on one alternative to the exclusion of other approaches to meeting the municipal goals just passed by the City Council. A question is "Are we substituting one form of regulated monopoly for another? Xcel is regulated by the Public Utility Commission while a Boulder utility will be overseen by the City Council.

Among the complexities of comparing private versus public ownership and management is the comparison of the costs of service since the two institutions play on quite uneven fields. Public utilities benefit from lower interest rates in many cases by offering federal tax-free interest. Private utilities pay property taxes while public utilities usually do not, although some fees may be paid in lieu of taxes. In Boulder's case, the loss of taxes paid to Boulder by Xcel must be counted as a substantial cost of going public.

Former Denver Mayor Frederico Peña, in a letter to today's Denver Post ("Give consumers electricity choices"), asserts that electricity consumers can and should be given access to competitive markets that we enjoy in transportation, financial services, telecommunications, etc. However, this is not a simple issue since the regulated utility model has been the historical answer to covering the large fixed infrastructure costs of traditional electric system technology.

Thus the most relevant questions are "What form of ownership and management is most likely to be innovative in the use of new technologies that could free us from the infrastructure constraints of traditional technology?" And "Do we want to pay a high price for taking over what is likely to be an increasingly obsolete infrastructure?" These are the issues that will count in the long run.

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